Salon.com > government spending

Gov’t downsizes amid GOP demands for more cuts

Fri, 22 Feb 2013 15:59:00 +0000

WASHINGTON (AP) — Republicans and other fiscal conservatives keep insisting on more federal austerity and a smaller government. Without much fanfare or acknowledgement, they've already gotten much of both.

Spending by federal, state and local governments on payrolls, equipment, buildings, teachers, emergency workers, defense programs and other core governmental functions has been shrinking steadily since the deep 2007-2009 recession and as the anemic recovery continues.

This recent shrinkage has largely been obscured by an increase in spending on benefit payments to individuals under "entitlement" programs, including Social Security, Medicare, Medicaid and veterans benefits. Retiring baby boomers are driving much of this increase.

Another round of huge cuts — known in Washington parlance as the "sequester" — will hit beginning March 1, potentially meaning layoffs for hundreds of thousands of federal workers unless Congress and President Barack Obama can strike a deficit-reduction deal to avert them.

With the deadline only a week off, Obama and Republicans who control the House are far apart over how to resolve the deadlock. While last-minute budget deals are frequent in Washington, neither side is optimistic of reaching one this time.

Should you fear the sequester?

Tue, 19 Feb 2013 17:08:00 +0000

In his State of the Union address, President Obama did a little mansplaining about looming budget cuts -- “known here in Washington as ‘the sequester,’” he explained, adding that it is a “really bad idea." It may have sounded a bit condescending, but a recent poll showed that only 36 percent of Americans know what the sequester is.

We’re sure you're firmly in that 36 percent, but even political junkies may not know exactly what the cuts will do to everyday Americans. With just two weeks to go before the sequester goes into effect, negotiations are being put on the front burner, with President Obama leading a press conference this morning to demand action.

Here’s everything you need to know about what the sequester will do it if it's allowed to happen.

First of all, what is the sequester?

A package of $1.2 billion in spending cuts created by the Budget Control Act of 2011, scheduled to go into effect on March 1 . The cuts were meant to act like a loaded gun that Congress put to its own head in order to incentivize themselves to work together on a better deficit reduction program. They failed, and the cuts were triggered on Jan. 1, but Congress pushed back the deadline by a few months when it raised the debt ceiling on New Year's Eve.

Don’t cry for the Pentagon

Thu, 14 Feb 2013 18:30:00 +0000

(Note: You can watch Sirota deliver a short YouTube video version of this article by clicking here or by scrolling to the bottom).

Other than word that carnivorous Americans might have to curtail their unhealthy, environmentally destructive, inhumane and overly subsidized meat eating habit for a few weeks due to meat plant closures, the only other big piece of good news from imminent sequestration-related budget cuts is that they might slightly curtail defense spending.

You can be forgiven if the use of "slightly" prompted a double take and then disbelief. After all, for the last few months, we've been hearing apocalyptic warnings about any proposed cuts to the Pentagon.

Postal Service on brink of bankruptcy

Wed, 16 Jan 2013 18:05:00 +0000

The U.S. Postal service has lost $16 billion in the last year and $41 billion in the last five. Without a bailout this year it will go bankrupt, the Guardian's Heidi Moore reports.

The dire situation stems from a drop in mail volume, unusual pension requirements that require it to pre-fund worker benefits and the lack of authority to price postage based on market rates (it's pegged to inflation):

Richard Geddes, an assistant policy professor at Cornell and an American Enterprise Institute scholar who has studied the postal service, says first class mail has fallen from 103bn pieces in 2000 to just around 74bn pieces in 2011.

Even though it has shrunk from nearly 900,000 thousand employees in 1998 to about 530,000 now, many regulators and lawmakers see the US Postal Service's infrastructure as inefficient, and have talked about areas they would like to cut – the number of facilities that the USPS uses to process mail, for instance.

...The postal service has reached its $15bn credit limit with the US Treasury, and has in effect run out of money."This is the year that they borrowed so much that they can't borrow any more," [USPS Inspector General David] Williams said.

What if we go over the fiscal cliff?

Mon, 31 Dec 2012 08:45:00 +0000

WASHINGTON (AP) — Efforts to save the nation from going over a year-end "fiscal cliff" were still in disarray as lawmakers returned to the Capitol to confront the tax-and-spend crisis. A tone-setting quotation was Democratic Sen. Harry Reid's assertion that the House under Republican Speaker John Boehner had been "operating with a dictatorship."

President Barack Obama flew back to Washington from Hawaii after telephoning congressional leaders from his Christmas vacation perch. Once back, he set up a meeting with leaders of both parties at the White House late Friday to make a fresh attempt to find a solution before Monday night's deadline.

A look at why it's so hard for Republicans and Democrats to compromise on urgent matters of taxes and spending, and what happens if they fail to meet their deadline:

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NEW YEAR'S HEADACHE

Partly by fate, partly by design, some scary fiscal forces come together at the start of 2013 unless Congress and Obama act to stop them. They include:

— Some $536 billion in tax increases, touching nearly all Americans, because various federal tax cuts and breaks expire at year's end.

How Elizabeth Warren saved taxpayers $1 billion

Tue, 30 Oct 2012 16:15:00 +0000

While Mitt Romney and Barack Obama battle nationally for the right to occupy the White House for the next four years, perhaps the second most contentious significant race in the entire country is occurring in Massachusetts. That is where the Democratic Party's candidate for Senate, self-described advocate for the middle class Elizabeth Warren, faces off against Republican Scott Brown. Polls show the race is close, and the bitterness of the rhetoric matches the polling.

One of Scott Brown's most consistent arguments is that Elizabeth Warren represents Obama's liberal "tax and spend" policies leading to big government. But a new paper by Stanford political scientist Lucas Puente published in PS. Political Science and Politics shows that Elizabeth Warren's work on the Congressional Oversight Panel was highly advantageous to the taxpayer, saving over a billion dollars money by taking a skeptical approach towards the Treasury Department's bailout plans.

The issue has to do with an obscure part of the Troubled Asset Relief Program, or TARP, known as warrants. This was a piece of the bailout that was designed to allow the government to profit from its investment in banks.